7 Steps - To Avoid The New Instagram Cryptocurrency Fraud Wave

Facebook Inc.'s Instagram logo is displayed on the Instagram application on an Apple Inc. iPhone in this arranged photograph taken in Washington, D.C., U.S., on Friday, June 17, 2016. In a bid to give its users an incentive to create more content for the photo and video-sharing site, Facebook's Instagram is considering sharing revenue generated from news, sports, celebrities and other content said Carolyn Everson, vice president for global marketing solutions at Facebook. Photographer: Andrew Harrer/Bloomberg

Following a new wave of Instagram Cryptocurrency fraud described here - in which fraudulent sellers offer luxury brands to anticipated buyers at bargain prices, each user that consider a purchase of an item via Instagram might review a potential purchase using the following seven-step process.

1. Be suspicious - as high-end products have a particular price, ask the seller for a legitimate reason why they have decided to sell a mostly new luxury product with 80-90% discounts. Arguments that a seller needs access to financial liquidity quickly might be taken with a pinch of salt, as scammers who offer to sell the items for no more 400 Euro or less could have access to even short term loans with payday lenders to cover such insignificant monetary needs.

2. Ask for more and different pictures - scammers rarely actually own the item which they pretend to sell. In the case of suspicion, the user can request for more pictures by asking for more a precise view of the product, such as the interior of the bag or a picture from a particular angle.

3. Review the pictures - scammers tend to reuse pictures which are on publicly available profiles. Using free ‘reverse image search’, other websites which display this particular picture might be of help to identify if this image has been used for someone else.

As scammers claim that the displayed image reflects the actual pictures of the offered product. Finding the same item on the internet on multiple accounts not related to the seller should trigger increased suspicion.

4. Pay via debit- or credit card - if the seller claims to own a company or an e-commerce website, ask for his/her company registration links to the payment pages. Even though the seller might claim that he or she is moving between different bank accounts, the credit card transactions are being registered immediately and might be deposited into the ‘right’ bank account after the seller has completed the moving process. Furthermore, depending on the credit card provider and the jurisdiction the customer lives in, there is a possibility to fill a chargeback to the bank which issued the card - usually up to 120 calendar days since the purchase. The chargeback applies if the goods arrived damaged, item was not as described, or might not have been delivered at all. The chargeback doesn’t apply if the credit card has been used to exchange flat currencies to cryptocurrencies because of the irreversibility of the Blockchain transactions.

5. Consider avoiding wiring money or sending cryptocurrency - Different to credit and debit cards, both bank wires and cryptocurrency transactions are not bound by ‘chargebacks’, hence, so they cannot be reversed. When the seller offers two types of payment possibilities, wiring funds to another bank account leaves traces for authorities to potentially freeze the bank accounts. Such a process is impossible with cryptocurrencies.

6. Check if the cryptocurrency broker is engaged in e-commerce - Scammers tend to use logotypes or names of legitimate cryptocurrency brokers, claiming that they will deliver the requested product. In case of doubt, users can get in touch with currency exchange providers via chat, phone or email, as those providers usually don’t engage in e-commerce.

7. In case of the slightest suspicion - flag the account in the Instagram app and report potential fraud to law enforcement authorities, which mostly allow reporting cases using web interfaces.

Furthermore, as the procedure evolves, this summary might be already outdated, as scammers shift their behaviour partly depending on press coverage.

This summary has been used based on best practices from Nordic Cryptocurrency Brokerage Platforms but can only be viewed as a piece of information, and not potential advise.